Lilly unveils $27bn reshoring drive around four new plants

Eli Lilly seems to have responded to the threat by President Donald Trump of tariffs on the pharma industry if they don't relocate their manufacturing operations to the US.

The pharma group has just announced that it will build four new manufacturing facilities in the US – at a cost of around $27 billion – raising its total planned spending on US capital projects to more than $50 billion, which it claims is the largest pharma manufacturing investment in US history.

In a telling development, three of the four new sites will be used to produce active pharmaceutical ingredients (APIs), as reliance on imported APIs from countries like China has been highlighted by successive US administrations as a vulnerability in the US supply chain, with some estimates suggesting that 80% of APIs used in US medicines come from overseas.

Before being re-elected, Trump pledged to phase out US dependence on API imports from China within the first four years of his administration.

Earlier this month he introduced a 10% tariff on all Chinese goods – including APIs – and has just threatened across-the-board tariffs of up to 25% on all pharma imports, which has led to warnings of increased medicine prices, shortages, and reduced investment in R&D.

Lilly's announcement comes just a few days after Lilly's chief executive, David Ricks, and other pharma leaders had a meeting with Trump at the White House, at which the tariff and reshoring threat was delivered, according to a Bloomberg report.

The company directly mentions "reshoring critical capabilities of small molecule chemical synthesis" and indicates that the fourth facility will extend its network for sterile injectable manufacturing, adding to the billions of dollars it has already earmarked to ramp up production of its obesity and diabetes medicines.

Ricks said that "optimism about the potential of our pipeline across therapeutic areas – cardiometabolic health, oncology, immunology, and neuroscience – drives our unprecedented commitment to our domestic manufacturing build-out."

He added that the domestic investments will benefit "hard-working American families and increase exports of medicines made in the USA."

Lilly reckons that the new plants will employ around 3,000 workers, including engineers, scientists, operations personnel, and lab technicians when up and running, with another 10,000 working on their construction. They are scheduled to be completed within the next five years.

"We believe that our investments in America and upskilling our nation's workforce will spark a significant ripple effect," continued Ricks. "For every job we create, many more will be generated, positively impacting the communities that host our innovative new sites."